I have read many stories where the seller provided tracking number and still get screwed, and this actually happened to my friend last year. He shipped the package with USPS Priority. He provided Paypal the tracking number of the package. It was shown as delivered and the buyer even emailed him said he received it. A few days later the buyer filed a claim with Paypal saying it was not received, after going through dispute and showing Paypal the email he still got the money taken away from his account.
Do a quick search on Google and you will see a lot of people talking about how bad Paypal's Seller Protection is.
what they say on their website is that for the seller to take advantages of seller protection they need to ship with signature confirmation along with other condition. He shouldn't have problems with that but I've read that paypal often take buyer side. Why didn't your friend withdraw the money in his bank account. I don;t think paypal would take his money from there without his authorization.